This blog is dedicated to commentaries that relate to specific issues concerning American Samoa's Government (ASG). All participants are encouraged to take the facts, ideas, and opinions presented here into consideration so that they may strengthen their arguments. If you wish to be a contributor, please send an email to faitasi37@yahoo.com.

Sunday, January 09, 2005

Section 936 Tax Incentives Exposes Hypocrisy and Lack of Ideas

It is hypocritical for the governor to petition Uncle Sam to exempt businesses from federal income taxes all the while allowing the ASG Custom Division to collect its own taxes (fees count as taxes as well) on imports coming into the territory. The ASG set a new record this past year with about 25 million dollars collected in revenue. If the governor really wants to “promote other investment and development in American Samoa,” he could start by leaving that 25 million in the private sector.

Without the 25 million dollars in ASG coffers, Togiola will have to cut spending even if it means putting government employees’ jobs at stake. This is, after all, what he is asking of the federal government. If Uncle Sam approves of Section 936, the Fed will forego millions of dollars in revenue collection. As a result, the federal government cannot hire many mainland Americans due to lost of revenue from Section 936.

The ASG can garner support for its cause by demonstrating to American taxpayers that it too can forego some taxation. It can forego taxation by cutting excessive spending on festive activities like Flag Day. It can forego taxation by preventing employees at the Treasury Department from borrowing public monies. It can forego taxation by discontinuing the practice of stately funerals. It can forego taxation by privatizing fat bureaucracies, like the Department of Education and LBJ.

Instead of relying on taxation to support the economy, the people of American Samoa should rely on the growth of the private sector. It does not make any sense to lose money in taxes to the government only for the government to use those taxes to stagnate the growth of the private sector, which is a further loss of money. It’s a lose-lose situation. We have seen economic stagnation when the ASG put limits on interest rates charged for loans under $5000. We see economic stagnation today in the current limits on bus and taxi fares and in ineffective government services –increasingly the police department and for some time, public education.

The governor’s and our congressional representative’s position on Section 936 in the past few days highlights the fact that the ASG is fresh out of ideas when addressing the future of our economy, especially the tuna industry in American Samoa.